Revolving credit


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Line of Credit

An agreement between a bank and a company or an individual to provide a certain amount in loans on demand from the borrower. The borrower is under no obligation to actually take out a loan at any particular time, but may take part of the funds at any time over a period of several years. This agreement is fairly common in situations in which a business must make payroll but does not always have the operating income to do so, especially when its operating income is seasonal or otherwise varies from month to month. It is also called open-end credit or a revolving line of credit. See also: Credit Card.

Revolving credit.

A revolving credit arrangement allows you to borrow up to your credit limit without having to reapply each time you need cash. As you repay the money you have borrowed, it is available to be borrowed again.

For example, if you have a credit card with a credit limit of $1,500 and you make a purchase of $400, the amount of credit you have available is $1,100. But when you repay the $400, your credit limit goes back to $1,500 -- assuming you haven't charged anything else on the card.

At any given time, your balance due may fluctuate from zero to the maximum credit limit. If you don't use the credit line in any billing cycle, no fees apply in most cases. But if you have a balance due and don't repay the full amount, finance charges are added to your next bill.

Some revolving credit arrangements, such as a home equity line of credit, may have a predetermined end date, but the majority are open-ended as long as you make at least the minimum required payment on time.

References in periodicals archive ?
Revolving credit is what you can repeatedly use up to a set limit.
The new revolving credit facility carries an initial unused fee of 0.35% annually.
The Facility has been structured as a five year revolving credit facility and will be utilised to refinance existing debt.
Doug Fraser, chief financial officer of Taqa, said: "We saw a high level of interest in the syndication of the revolving credit facility from banks around the world resulting in the facility being oversubscribed.
Last week, LXP obtained a $200 million unsecured revolving credit facility.
A new $850 million five-year senior secured revolving credit facility will replace a $700 million revolving-credit facility.
The Haights Cross Operating Company (HCOC), a wholly owned HCC subsidiary, priced the $270 million capital structure consisting of a $30 million Senior Secured Revolving Credit Facility, a $100 million Second Priority Senior Secured Floating Rate Term Loan, and $140 million of Senior Unsecured Notes.
CHICAGO-TruServ Corp., based here, said last week that it reached an agreement with a lender that holds its revolving credit facility as well as holders of its senior notes to amend its financial agreements.
The new deal has thee major components: a $475 million seven-year revolving credit; a $100 million seven-year term loan; and an eight-year $425 million term loan.
However, he cautions businesses about using revolving credit, which provides easy access to funding but can eat away at your cash on hand with high interest rates.
Kimbell Royalty Partners is pleased to announce the increase of the borrowing base and total commitments under the company's revolving credit facility.
M2 EQUITYBITES-March 22, 2019-Sanderson Farms Inc enters into new USD1.0bn revolving credit facility